Category Archives: Reflections

Tackling the Tragedy of the Commons in mining

Lotus Ruan, MAAPPS // Jan 25, 2015

While the call for a cleaner environment and greener alternative energy is on the rise around the globe since years ago, mining, which often leads to erosion, formation of sinkholes, loss of biodiversity, and contamination of soil, groundwater, surface water by chemical during the mining process, is still an important economic activity in many countries.

Mining takes place in half of the countries in the world; among them, 50 were considered by the World Bank as “mining countries” because such industry stood as one of the backbones for the country’s exports, domestic markets, or for employment. It is estimated that the formal mining sectors provides over 3.7 million employment, with more than 20 million workers involved in artisanal and small-scale mining . Statistics, though not the most up-to-date, reported that in 2010 there were 1.5 million people employed in the mining sector in developed countries, the figure being 2.2 million in developing ones.

However, whereas the development and sustenance of the world economy requires exponential amounts of energy, most of it is non-sustainable natural resource. With the increasing population and more and more industrialized societies, how to better utilize and sustain the use of energy—and in our project in particular, it ranges from metals, coals, oil shale and other geological materials to non-renewable resource such as petroleum an natural gas—has become a an unnegligible concern, if not a priority, for local communities, environmental groups, and governments.

Such concern or the dilemma between economic development and environmental preservation , seen from a policy studies student’s perspective such as myself, can and should be explained through the concept of “the tragedy of the commons”. “Commons” often refers to shared resources that are not formally regulated. Coined by economist Garrett Hardin in his famous paper published on Science in 1968, this is perhaps one of the most commonly-shared concerns among policy-makers. The tragedy of the commons concept can be briefly explained as individuals acting independently and rationally according to each’s self-interest, behave contrary to the best interests of the whole group, by depleting some common resource. It is often cited in connection with sustainable development, meshing economic growth and environmental protection.

Hardin pessimistically predicted that “the population problem has no technical solution; it requires a fundamental extension in morality.” Perhaps this is where the Extractive Industries Transparency Initiative (EITI) and other local, domestic, or international monitoring organizations jump in in the field of mining. In essence, EITI, with the aim of increasing transparency in transactions between governments and companies within extractive industries, is hoping to establish a set of “morality” that helps regulate the mining industry.

The aim is encompassing and promising. However, regulations are not a cure-all. At the end of the way, it all boils down to whether local government, civil society, and mining companies themselves carry out and abide by these regulations or not. In fact, most mining countries have existing laws that require mining companies to follow stringent environmental and rehabilitation codes in order to minimize environmental impact and avoid impacting human health. The reality is, however, that relevant government or international regulations work out in some places but not others.

Why is that? What can we do to ensure the success of enforcement of regulations? IN the case of EITI regulations in particular, how can advance the transparency level in certain country and how is that related to its mineral resource development? These are some of the issues that I am concerned about in our project. Unfortunately, I don’t have any prior knowledge of mining or EITI and only little understanding of Mongolia and other EITI member countries. So my goal here is to learn as much as I can from my peers, instructors, published reports, and through interactions with local office, people, stakeholders that are actually involved in either EITI actives or the mining industry. Hopefully by the end of the project, I will be able to not only make sense of such economic activity but also produce policy recommendations to the tackle the tragedy of the commons problem in this resource-constrained industry.

UNLOCKING THE POWER OF CIVIL SOCIETY

Harry Li, MAAPPS student // Jan 24, 2015

(Picture credit to CASPER CRUZ2014)

Coal, copper, and gold are the principal reserves mined in Mongolia. Currently, Mongolia exports 80% (expected to rise over 90%) of its mining resources, accounting for 21% of its national GDP. In 2011, Mongolia has been determined to be one of the Global Growth Generators and an emerging global market with most promising growth prospects for 2010–2050. Many resource-rich countries remain poor even after heavy exports, often due to local corruption. This is commonly referred to as the ‘Resource Curse.” EITI is a global Standard promoting openness and accountable management of natural resources. It seeks to strengthen government and company systems, inform public debate, and enhance trust. As a member country, EITI aims to promote transparency in Mongolia in order to prevent the resource curse.

Aside from preventing the resource curse, there are many other benefits in complying with the EITI standard. Barrett, Liz and Okamura argue that even corrupt countries would want to join EITI because governments are concerned about their reputation with international donors and expect to be rewarded by increased aid. Their quantitative analysis demonstrates that EITI countries gain access to increased aid the further they progress through the EITI implementation stages. It takes three stages to become an EITI country: ‘Commitment, Candidacy and Compliance.’ The whole process would take over 5 years and Barrett’s analysis illustrated that the CPI (Corruption Percentage Index from Transparency International) score does improve when a country implement EITI standards overtime.

The Asia Pacific Policy Project on Mongolia mining aims to promote civil society engagement on Mongolian mining, thus improving government’s transparency and democracy building. At the moment, many Mongolian mines are unregulated and the rights of miners are not protected. More civil society engagement would pressure further proper mining regulations from the Mongolian government. In the end, Mongolia would practice‘Responsible Mining,’ benefit local citizens and truly prevent the “Resource Curse.”

I am thrilled to work on this project. I grew up in Inner-Mongolia, China, where mining projects had been a constant problem. Many mines in Inner Mongolia are unregulated with deaths occurring daily. Private mining companies exploit the land resources in cooperation with the corrupted officials. Private mining often forces relocation of Mongolian herders and rural citizens. I have witnessed accounts of Inner Mongolians protesting against mining companies. Thus, promoting the engagement of civil society in Mongolia would prevent tragedies alike.

My first task is to look at another EITI country and investigate how it engages its civil society. If suitable, Mongolia could learn and adapt its method and promote civil society engagement and transparency. I have chosen the Republic of Congo for my investigation.

Reference

David-Barrett, Liz, and Ken Okamura. “The Transparency Paradox: Why do Corrupt Countries Join EITI?.” online],< http://eiti. org/files/The-Transparency-Paradox.-Whydo-Corrupt-Countries-Join-EITI1. pdf>(accessed 9 December 2013). Oxford: University of Oxford (2013).

TRUST AND TRANSPARENCY

Jocelyn Fraser, PhD student in Mining Engineering // Jan 22, 2015

As representatives of international governments, business and civil society gather together this week at the World Economic Forum, delegates are grappling with issues similar to those faced by the EITI: securing economic growth and social inclusion, and enhancing environment and resource security. Making progress on these matters requires the participation of multi-stakeholder groups committed to transparency – of which there are many. It also requires trust – of which there is little.

According to the 2015 Edelman Trust Barometer, the past year brought a sharp decline in trust in public institutions and business as gains of recent years were swept away in a series of disasters and mismanagement ranging from data hacks to mysterious air crashes, from financial scandals to Ebola. The Trust Barometer findings are echoed in research by Globescan (Viewpoints for Business in 2015) that shows national governments, global companies, media, and even the United Nations, all scoring negative trust ratings. In both cases, the research suggests that citizens want stronger regulation of business yet have little confidence that policy makers can develop, implement and enforce the rules.

Transparency is a key driver of trust. And earning trust will be a critical requirement as the EITI seeks to implement stronger provisions for tracking transfers of resource revenues to sub-national tiers, and to address issues associated with shell companies (corporate entities that are little more than a mailing address in a foreign tax haven) and transfer pricing (the manipulation of costs and prices to reduce tax liability). These focus areas are in addition to the EITI’s ongoing effort to account for revenues lost to corruption and bribery, an amount the World Bank estimates at US$1T annually in the global oil and gas and mining sectors.

How will Mongolia, with its numerous opportunities for economic advancement through resource development, manage these issues? As an EITI member country, are there lessons to be learned from the experience of other members, or from initiatives such as Dodd Frank, the EU directive on transparency, or Britain’s legislation requiring companies to disclose their owners? Is Mongolia better positioned to succeed given its political stability and the relatively recent addition of mining to its economy? And, perhaps most importantly, can mining companies and communities in Mongolia work to identify points of intersection between the needs of the two so that co-benefits can be pursued and shared value created?

Making a Difference: The EITI project in Mongolia

Jon Brasnett, MAAPPS // Jan 19, 2015

The EITI has been officially implemented in Mongolia since 2010 and has the potential to bring enormous structural, developmental and societal changes to the country. Unlike many other countries plagued with an abundance of natural resources, Mongolia is geographically situated between Russia and China, two major economic and political power houses who have the self-entitled capacity to exploit the resources of other nations. While other countries with natural resources have also suffered the “resource curse” and been exploited by powerful and resource-hungry nations, many of them are geographically located far away from any major power so that the terms of extraction might be negotiated more in the favour of the country being exploited. Because of Mongolia’s location, it is our duty as students of public policy, to ensure that the natural resources, all of which belong to the people of Mongolia, are extracted sustainably and without harming any Mongolians, with the added benefit of increased social service provision by the government through proper taxation of the mining industry.

Wealthy countries seem to have this idea that their people have grown accustomed to living with certain luxuries (cars, electricity, clean water, precious gems) and therefore deserve to have continued access to these luxuries. For the governments of these countries, this means that they are willing to cut corners in less developed countries to maximize their extraction of these resources, even if cutting corners means allowing for less development and less access to basic necessities for the people of the countries they exploit. In the case of Mongolia, as we see in the Asia Pacific Memo video on EITI implementation there, many of its citizens have been negatively affected by the mining industry. Some nomadic pastoralists have been forced to relocate their herds and homes, other citizens have gone on without living without access to clean water, electricity, education or health services, and those Mongolians who have been given jobs in mines have been forced to sign wavers which remove any blame from the mining company in the event of their deaths on the job. This treatment is unfair, inhumane, and absolutely unacceptable for developed countries who claim to uphold the UN declaration of human rights.

In this light, I am looking forward to researching the EITI implementation in Mongolia and other countries to see what kind of progress has taken place in recent years. I hope to be able to influence policy in Mongolia, along with my colleagues, to improve the transparency of these companies and the government mining department to ensure that all the money is accounted for. This money can, in turn, go towards funding social services for Mongolian citizens to provide necessities such as clean drinking water, housing, food, as well as important developmental infrastructure such as roads, hospitals, schools and the like. With these improvements to Mongolian society and state, this resource-rich country can make huge strides in their developmental goals and come more in line with other developed countries.

Geopolitical and Geo-Economic Landscapes Canada-Mongolia

Bérangère Maïa Parizeau, MAAPPS // Jan 18, 2015

I find the unique dynamics between NGOs, different levels of government, other agencies and the public to be fascinating. EITI is a Norwegian NGO registered under the name of The Association for Extractive Industries Transparency Initiative” or “EITI Association” which operates globally.

(Important link: to see all EITI Reports, go to data.eiti.org)

EITI is a great example of this dynamic policy-making process. The EITI operates as an official mediator for transparency and national public accountability in extractive sectors globally. The United States applies EITI standards and has passed a measure for companies registered with the Securities and Exchange Commission to disclose how much they pay for natural resources access under the Section 1504 of the Dodd-Frank Act. The Dodd-Frank financial reform is considered a landmark legislation. The countries of Nigeria and Liberia have EITI standards legislations. In Norway, Ghana and Sierra Leone, mining and petroleum extraction laws include EITI criterions. Why is Canada not a EITI member?

EITI in Canada would contribute to Canadian public debate on natural resource accountability. Considering that Canada has been referred to as the country with the worst environmental performance in the western world, in my opinion this is worrisome. China is not a EITI member. The United States is a member. I’d like to find out why Canada is not a EITI member.

For information on Canada’s embarrassing environmental performance please visit: http://oilsandsrealitycheck.org/facts/climate-5/

As a reference, the above website was brought to my attention by Dr Tzepora Berman, who received an honorary law PhD degree from UBC. Tzeporah is known for her work as the coordinator of one of the largest civil disobedience in Canada’s history, the logging blockades in Clayoquot Sound during which she was arrested and charged with 857 counts of criminal aiding and abetting. Tzeporah was one of the creators and lead negotiators of the Great Bear Rainforest campaign as well as the Canadian Boreal Forest Agreement. Her work has contributed to the protection of over 40 million hectares of old growth forests.